Compensation for damaged and destroyed business property: what sole proprietors and companies should do

For business owners, it is important to distinguish between the government program «єВідновлення» (eRecovery) and mechanisms for compensating business losses. The «єВідновлення» program is intended for damaged or destroyed housing and is not a compensation program for destroyed shops, warehouses, offices, production facilities, equipment, or business inventory. For businesses, the main task is to properly document the incident and losses, confirm property rights, conduct an inventory and assess the losses, and submit a claim to the international Register of Damage if a claim category is already available for the relevant type of loss.

Legal entities can already submit claims to the Register of Damage, including under categories C3.1 «Damage, Destruction or Loss of Assets» and C3.2 «Loss of Control over Property in Temporarily Occupied Territories». Category A3.5 is provided for Sole Proprietorships that have lost business profits, while an individual who owns non-residential premises may use category A3.2. Separate rules of the Register also provide for other economic losses and relocation expenses. The recording of a claim in the Register does not mean that compensation has been awarded or paid: the future International Claims Commission will be responsible for examining claims on their merits and determining compensation.

Can a business receive compensation under the «єВідновлення» program?

Law No. 2923-IX regulates compensation for certain categories of damaged and destroyed real estate. These primarily include apartments, other residential premises, detached houses, garden houses, summer cottages, and certain residential construction projects defined by law. This program does not serve as a general mechanism for compensating businesses for damaged or destroyed shops, warehouses, production facilities, offices, equipment, or goods.

A Sole Proprietorship owner may use the «єВідновлення» program as an individual homeowner if the specific property meets the program's requirements. Entrepreneurial status alone does not entitle a person to receive compensation through «єВідновлення» for property used in business activities.

This distinction has practical significance: an entrepreneur may be eligible for government housing compensation for a destroyed apartment, while compensation for a destroyed shop, goods, and lost profits must be sought through other mechanisms.

What business losses should be documented?

Resolution of the Cabinet of Ministers of Ukraine No. 326 and the Methodology approved by Order No. 3904/1223 of the Ministry of Economy and the State Property Fund provide for determining actual losses, lost profits, and recovery needs of enterprises and other business entities. The Methodology covers real estate, machinery and equipment, vehicles, inventories, biological assets, integrated property complexes, and other property.

Businesses should document the following separately:

Methodology No. 3904/1223 defines lost profits specifically as profits not received, rather than all potential revenue. Therefore, it is not enough to show how much revenue a business could have generated from sales: the expenses that would have been necessary to earn that revenue must also be taken into account. The international Register of Damage applies a similar approach.

What should an entrepreneur do immediately after property is damaged or destroyed?

1. Document the consequences

If it is safe to enter the property, take photographs and videos of:

• the overall condition of the property;

• the address and landmarks that help identify the location;

• damage to the building;

• equipment, machinery, and goods;

• serial numbers, inventory numbers, and markings, if they have survived;

• evidence of fire, explosions, debris, and other consequences of the incident.

Do not dismantle damaged equipment, remove remaining goods, or begin repairs before the initial documentation has been completed, unless immediate action is necessary to eliminate a danger.

If the area is mined, under shelling, or occupied, there is no need to risk your life to take photographs. Different types of evidence may be used for the international Register, and separate claim categories are available for property located in temporarily occupied territories.

2. Report the incident to the police or prosecutor's office

A report of a criminal offence is important additional evidence of the circumstances in which property was destroyed or damaged. The report should describe the incident, its date and location, the damaged property, the estimated consequences, and include any available supporting materials.

Under Article 214 of the Criminal Procedure Code, an investigator, inquiry officer, or prosecutor must enter the relevant information into the Unified Register of Pre-Trial Investigations (URPI) without delay, but no later than 24 hours after receiving the report or notification, initiate an investigation, and provide the applicant with an extract from the URPI within 24 hours after entering the information.

Entrepreneurs do not need to determine the final criminal-law classification of the incident themselves. The applicant's task is to describe the facts accurately and obtain confirmation that they have been registered.

3. Submit information about damaged real estate to the State Register

The procedure established by Resolution of the Cabinet of Ministers of Ukraine No. 380 provides for the submission of information notices concerning damaged and destroyed real estate. A representative of a legal entity may submit such a notice through the Diia portal. The notice includes information about the property, rights to it, its condition, the date and circumstances of the damage, a description, and photographs and videos, if available.

The operation of the State Register of Property Damaged and Destroyed as a Result of Armed Aggression is also regulated by Resolution of the Cabinet of Ministers of Ukraine No. 624.

Important: an information notice about damaged property is not a decision to award compensation to a business. It records information in the government system and may form part of the evidence.

4. Conduct an inventory

For legal entities, Article 10 of Law No. 996-XIV requires an inventory of assets and liabilities to confirm their actual existence, condition, and valuation. The detailed procedure is established by Regulation on the Inventory of Assets and Liabilities No. 879.

After business property has been damaged, it is advisable to establish a commission and document:

• what actually remains;

• what has been destroyed;

• what has been damaged but can be restored;

• what has been lost or is inaccessible;

• the quantity and value of remaining inventory;

• the condition of fixed assets and equipment.

If the incident resulted in a fire, deterioration of assets, or other circumstances for which Regulation No. 879 expressly requires a mandatory inventory, the specific requirements of that Regulation must be followed.

Regulation No. 879 does not apply to Sole Proprietorships in the same way as it does to legal entities. Nevertheless, an entrepreneur should also prepare their own set of supporting documents: a list of lost goods and property, an incident report or write-off document, purchase documents, statements, invoices, photographs, and other evidence.

5. Collect documents confirming ownership and the origin of property

Depending on the type of asset, the supporting documentation may include:

• extracts from the State Register of Proprietary Rights to Immovable Property;

• purchase and sale agreements, lease agreements, and leasing agreements;

• acceptance and transfer certificates;

• outgoing and incoming goods invoices;

• customs declarations;

• payment documents;

• technical passports;

• vehicle documents;

• fixed asset inventory cards;

• accounting registers;

• contracts with counterparties;

• financial statements and tax returns;

• warehouse reports and inventory balance records.

The more accurately you can prove that a particular asset existed before the incident, along with its characteristics and value, the stronger your evidence will be.

How to document damage to a building

The Procedure for Urgent Works approved by Resolution of the Cabinet of Ministers of Ukraine No. 473 applies to buildings and structures. The damage category of a property is determined based on an inspection or survey and indicates whether the property can continue to be used or whether its operation must be discontinued.

If a shop, warehouse, office, or production building has been damaged, a technical inspection is especially important when it is necessary to establish:

• whether the building can be used safely;

• the extent of structural damage;

• the need for major repairs or reconstruction;

• the need for demolition;

• the scope of restoration work.

The Methodology for Conducting Inspections and Documenting Their Results also applies to professional inspections of properties damaged as a result of hostilities.

How to determine the amount of business losses

An internally prepared company report or an arbitrary cost estimate is not sufficient when professional confirmation of substantial losses is required.

Methodology No. 3904/1223 is mandatory when assessing losses suffered by enterprises and other business entities as a result of armed aggression. It provides for independent valuation by a professional valuation entity or forensic examination. The valuation result must be expressed in monetary terms.

The following may be assessed, in particular:

• actual losses resulting from damage, loss, or destruction of real estate;

• machinery and equipment;

• vehicles;

• inventories;

• other movable property;

• lost profits;

• recovery needs.

The Methodology separately provides for the valuation of movable property owned by a Sole Proprietorship that is not reflected in an enterprise's financial statements. Such valuation is possible if there is evidence that the property existed on the date the damage occurred and information about its age and technical condition.

The valuation date is determined according to the Methodology and cannot be earlier than February 23, 2022. Expenses for independent valuation, expert examination, and, where necessary, review of the valuation report are paid by the enterprise, an individual, or other sources not prohibited by law.

International Register of Damage: what claims can a legal entity submit?

The Register of Damage Caused by the Aggression of the Russian Federation Against Ukraine was established to collect and preserve claims and evidence concerning damage, loss, and injury caused from February 24, 2022, onwards within the internationally recognized borders of Ukraine. It covers claims submitted by individuals, legal entities, and the state.

C3.1 — damage, destruction, or loss of assets

This category is already available to legal entities through Diia.

It covers claims relating to:

• damage, destruction, or loss of assets;

• loss of profits associated with those assets;

• total loss of business;

• other direct expenses caused by damage, destruction, or loss of assets.

The concept of an asset covers tangible and intangible resources from which the owner receives or expects to receive economic benefits.

A legal entity must provide information confirming the claimant's identity and the representative's authority, ownership rights or, where permitted, the right of economic management or operational management, details of the asset, the circumstances of the incident, a description and assessment of the damage, the estimated claim amount, and the calculation methodology.

C3.2 — loss of control over property in temporarily occupied territories

This category is open to legal entities that lost control over their property because of temporary occupation on or after February 24, 2022. Claims are submitted through Diia.

Claims may include the value of the property, lost profits resulting from the inability to use it, and total loss of business. A claim may also be submitted for property located in an area that was subsequently liberated and over which control has been restored.

If control over an asset is restored after a claim has been submitted, the claimant must update the information in the Register.

C3.3 — displacement or evacuation of a business

The rules of the international Register provide for a separate category, C3.3, for legal entities forced to relocate or evacuate their businesses. Claims may include transportation and logistics expenses, business restart costs, certain personnel expenses, and lost profits associated with relocation.

C3.4 — other economic losses

Category C3.4 is intended for economic losses suffered by legal entities that do not fall under other specific categories. However, damaged assets and related losses fall under C3.1, while loss of control over property in temporarily occupied territories falls under C3.2.

The Register's claim forms are being introduced gradually in Diia, so the availability of a particular category for electronic submission should be checked directly in the current service catalog.

What claims can a Sole Proprietorship submit?

It is important for entrepreneurs not to confuse claim categories intended for legal entities with those intended for individuals.

A3.5 — loss of private entrepreneurship

This category is intended for individuals who are or were previously registered as Sole Proprietorships and who, because of Russian aggression, lost the ability to conduct their business activities fully or partially and consequently suffered a loss of profits. A claim can also be submitted if the Sole Proprietorship has already been officially terminated.

Category A3.5 covers lost profits specifically. Supporting evidence may include documents relating to business activities before they were discontinued: contracts, invoices, certificates, bank statements, tax returns, and other financial records.

Loss of assets themselves and relocation expenses do not fall under A3.5. The Register's rules assign such economic losses suffered by Sole Proprietorships to category A3.7.

A3.2 — damage or destruction of non-residential real estate

If a shop, office, warehouse, workshop, or other non-residential property is owned by an entrepreneur as an individual, category A3.2 is available for damage to or destruction of that property. The claim must include ownership details, the circumstances of the damage, supporting evidence, and the value of the losses. If the property has several co-owners, each must submit a separate claim.

A3.6 — loss of access to or control over real estate in temporarily occupied territories

An individual who owns real estate in a temporarily occupied territory may submit a claim under category A3.6 for loss of access to or control over the property. The claimant must confirm their rights to the property, describe the circumstances in which access or control was lost, and provide supporting evidence.

A3.7 — other economic losses

The rules for A3.7 cover, among other things, economic losses suffered by Sole Proprietorships due to damage, destruction, or loss of assets used in their professional activities, as well as expenses associated with the evacuation or relocation of a business, including transportation, logistics, restart costs, and other direct expenses.

The Register's claim categories are being opened for submission gradually, so before preparing a claim, you should check whether the relevant electronic form is already available in Diia.

What evidence should be prepared for the international Register of Damage?

There is no single document that independently proves the full amount of losses. It is advisable to prepare a separate electronic evidence file for each property or group of related assets.

It may include:

1. Documents identifying the claimant and confirming the representative's authority.

2. Documents confirming ownership, economic management rights, operational management rights, or another right permitted under the rules of the relevant category.

3. Photographs and videos taken before and after the incident.

4. Inventory documents and write-off reports.

5. Accounting and warehouse records.

6. Contracts, invoices, certificates, and payment documents.

7. A technical inspection report for the building.

8. Reports from the State Emergency Service of Ukraine and other services, if prepared.

9. An extract from the Unified Register of Pre-Trial Investigations, if a criminal offence has been reported.

10. An independent valuation report or expert opinion.

11. Documents concerning income, expenses, and profits for calculating lost profits.

12. Documents confirming evacuation, transportation, or relocation expenses.

The international Register itself recommends submitting all relevant documents, records, photographs, and other evidence that can help support the claim.

Accounting for destroyed property

A legal entity must reflect the consequences of asset losses in its accounting records in accordance with the applicable Ukrainian national accounting standards or International Financial Reporting Standards (IFRS). This requirement is expressly taken into account in Methodology No. 3904/1223.

In practice, the accounting procedure should be based not only on photographs of the destruction but also on primary documents:

• an order to conduct an inventory;

• inventory lists;

• commission minutes and decisions;

• a damage or write-off report;

• technical and expert documents;

• documents confirming the original cost and carrying amount;

• documents confirming the cause of the loss.

For tax and accounting purposes, it is especially important that the quantities and names of written-off goods match the warehouse records and primary documents.

VAT on destroyed goods and fixed assets

For VAT payers, a special rule applies under paragraph 32¹ of Subsection 2, Section XX of the Tax Code. If goods purchased in VAT-taxable transactions are destroyed or lost due to force majeure during martial law or a state of emergency, they are not considered to have been used in non-business or non-taxable activities. Therefore, compensating VAT liabilities under paragraph 198.5 of the Tax Code of Ukraine are not accrued.

The State Tax Service separately emphasizes the importance of proper documentary evidence. In its clarification dated August 10, 2026, the tax authority specifies the need for primary documents confirming the destruction or loss and a certificate of force majeure issued by the Ukrainian Chamber of Commerce and Industry or an authorized regional chamber of commerce and industry.

Paragraph 189.9 of the Tax Code of Ukraine also applies to the disposal of fixed assets in cases of destruction, damage, or disposal without the taxpayer's consent, provided that proper supporting documentation is available. Therefore, documents supporting the write-off of a fixed asset must confirm that it has been destroyed, dismantled, or transformed to such an extent that it can no longer be used for its original purpose.

Do write-offs need to be processed through an ECR or PECR?

No. The internal write-off of destroyed goods from warehouse or accounting records is not a payment transaction with a customer.

Law No. 265/95-VR defines a payment transaction as the acceptance of funds or payment instruments from a customer for goods or services, as well as the refund of funds to a customer. When destroyed goods are written off, there is no customer and no settlement with one. Therefore, a separate fiscal receipt is not generated merely because goods are written off.

If some damaged goods are subsequently sold to customers, the sale itself must be processed through an ECR/PECR in accordance with the general rules.

What should you do if property remains in a temporarily occupied territory?

Being unable to physically inspect an asset does not mean that the loss should go undocumented.

A legal entity should preserve:

• property documents;

• the latest inventory records from before control was lost;

• previously taken photographs and videos;

• accounting registers;

• inventory balance records;

• equipment documents;

• lease agreements or documents confirming rights of use;

• correspondence with employees, landlords, and utility providers;

• available information about occupation, seizure, or the inability to use the property.

Category C3.2 is specifically available to legal entities in this situation. Category A3.6 is provided for individuals in relation to real estate.

There is no need to travel to occupied or dangerous territory simply to collect new evidence.

Does submitting a claim to the Register of Damage mean that the business will receive money?

No. The international Register of Damage:

• accepts claims;

• checks their compliance with the eligibility criteria;

• preserves claims and evidence;

• makes decisions on recording eligible claims in the Register.

It does not examine claims on their merits, determine the final amount of compensation due, or make payments. These functions are intended to be performed by the International Claims Commission.

The Convention establishing the International Claims Commission has already been opened for signature, and a preparatory committee has been established. The committee held its first meeting on June 22–23, 2026. Establishing the Commission requires 25 ratifications and sufficient financial commitments to begin its operations. According to the Council of Europe, as of August 5, 2026, the Convention had been signed by 40 states and ratified by seven states and the European Union.

Therefore, the main practical task for businesses at present is not to expect an automatic payment but to build an evidence base that can be used within the international compensation mechanism.

How to conduct an inventory and write off goods destroyed or damaged by hostilities in Torgsoft

In Torgsoft, you can record actual inventory balances after a shop or warehouse has been damaged by conducting an inventory. After counting the goods and closing the inventory statement, the software adjusts warehouse balances to match the actual quantities: a goods receipt document is automatically created for surpluses, while a write-off document is created for shortages. This makes it possible to distinguish goods that are no longer physically present from those that survived the incident.

To record destroyed or unusable goods separately, use «Document → Write Off Goods from Warehouse». You can add specific product items to the document; Torgsoft displays their quantities, retail prices, costs, monetary values, and warehouse balances. Files can be attached to a warehouse document using the «Document Files» function. This allows a business to store photographs, scanned reports, or other materials used in its supporting documentation together with the internal write-off record.

Torgsoft data helps confirm the recorded quantity of goods, generate a write-off document, and determine the warehouse cost of losses. However, documents generated by the software do not replace an official technical inspection of real estate, law enforcement documents, an independent valuation under Methodology No. 3904/1223, or a claim submitted to the international Register of Damage. They should be used as part of the enterprise's internal records and supporting evidence.

Common mistakes when documenting business losses

1. Submitting an «єВідновлення» claim for a shop or warehouse. The government housing program is not a universal compensation scheme for business assets.

2. Assuming that a damaged property notice is a compensation claim. Registering information about real estate documents the incident but does not, by itself, establish a business's right to receive a monetary payment.

3. Writing off goods only in accounting or warehouse software without external evidence. A broader set of documents is required for tax and compensation purposes.

4. Calculating lost profits as all revenue not received. Valuation rules are based on lost profits, meaning that relevant expenses must also be taken into account.

5. Failing to preserve financial records from the pre-war period and the period immediately preceding the incident. These records may provide a basis for demonstrating normal business performance and lost profitability.

6. Submitting a legal entity's claim under a category intended for Sole Proprietorships, or vice versa. The Register provides different categories for different types of claimants.

7. Assuming that recording a claim in the international Register constitutes a compensation decision. The Register records eligible claims and evidence; the future Commission is responsible for deciding the compensation amount.

8. Restoring or disposing of damaged property before properly documenting it. Unless immediate action is necessary for safety reasons, evidence should first be collected, an inventory conducted, and, where necessary, a technical inspection or valuation performed.

Official sources

• Law of Ukraine «On Compensation for Damage to and Destruction of Certain Categories of Immovable Property…» No. 2923-IX — Articles 1–2, provisions concerning the types of damaged and destroyed property and recipients of housing compensation. Text of Law No. 2923-IX on the website of the Verkhovna Rada of Ukraine

• Resolution of the Cabinet of Ministers of Ukraine dated March 26, 2022, No. 380 «On the Collection, Processing and Recording of Information on Damaged and Destroyed Immovable Property…» — the procedure for submitting information notices, including by representatives of legal entities.

• Resolution of the Cabinet of Ministers of Ukraine dated June 13, 2023, No. 624 — the procedure governing the operation of the State Register of Property Damaged and Destroyed as a Result of Armed Aggression.

• Resolution of the Cabinet of Ministers of Ukraine dated March 20, 2022, No. 326 «On Approval of the Procedure for Determining Damage and Losses Caused to Ukraine…» — areas and organizational principles for determining losses resulting from armed aggression.

• Order of the Ministry of Economy of Ukraine and the State Property Fund of Ukraine dated October 18, 2022, No. 3904/1223 — the Methodology for Determining Damage and the Amount of Losses Suffered by Enterprises; Sections I–IV concerning actual losses, independent valuation, assets, and lost profits.

• Resolution of the Cabinet of Ministers of Ukraine dated April 19, 2022, No. 473 — the procedure for urgent works and inspections of damaged buildings and structures.

• Resolution of the Cabinet of Ministers of Ukraine dated March 29, 2024, No. 365 — the procedure for submitting claims through Diia to the Register of Damage Caused by the Aggression of the Russian Federation Against Ukraine.

• Law of Ukraine «On Accounting and Financial Reporting in Ukraine» No. 996-XIV — Articles 9–10 concerning primary documents and inventories of assets and liabilities.

• Order of the Ministry of Finance of Ukraine dated September 2, 2014, No. 879 «On Approval of the Regulation on the Inventory of Assets and Liabilities» — rules for conducting and documenting inventories.

• Tax Code of Ukraine No. 2755-VI — paragraph 189.9, paragraph 198.5, and paragraph 32¹ of Subsection 2, Section XX concerning VAT on destroyed goods and fixed assets. Tax Code of Ukraine

• Law of Ukraine No. 265/95-VR «On the Use of Registrars of Payment Transactions…» — Article 2, definition of a payment transaction.

• Criminal Procedure Code of Ukraine No. 4651-VI — Article 214 concerning the entry of information into the Unified Register of Pre-Trial Investigations and the issuance of an extract to the applicant.

• State Tax Service of Ukraine, clarification dated August 10, 2026, «Force Majeure and Destruction of Goods: When VAT Liabilities Are Not Accrued» — documentary evidence of destroyed or lost goods and application of paragraph 32¹ of Subsection 2, Section XX of the Tax Code of Ukraine.

• Register of Damage for Ukraine — Council of Europe — rules for categories A3.5, A3.7, C3.1, C3.2, C3.3, C3.4, and other official claim forms.

• Council of Europe — Convention establishing an International Claims Commission for Ukraine — the status of the Commission's establishment, its powers, and the conditions for the Convention's entry into force.

• Diia — C3.1 «Damage, Destruction or Loss of Assets» for legal entities.

• Diia — C3.2 «Loss of Control over Property in Temporarily Occupied Territories» for legal entities.

• Diia — A3.5 «Loss of Private Entrepreneurship» for Sole Proprietorships.

• Diia — A3.2 «Damage or Destruction of Non-Residential Immovable Property» for individuals who own the relevant real estate.

• Diia — A3.6 «Loss of Access to or Control over Immovable Property in Temporarily Occupied Territories».